diga Posted February 20, 2014 Posted February 20, 2014 Whatsapp, has been acquired by facebook for: $4 Billion in cash $12 Billion in facebook shares $3 Billion to employees in stock options over 4 years
Raghav_12 Posted February 20, 2014 Posted February 20, 2014 19 billion is too high valuation. Facebook made a mistake. Would be interesting to see how they monetize whatsapp.
diga Posted February 20, 2014 Author Posted February 20, 2014 19 billion is too high valuation. Facebook made a mistake. Would be interesting to see how they monetize whatsapp. Not sure about that.. but a blog I regularly visit says it may be just right http://capitalmind.in/2014/02/whatsapp-bought-by-facebook-for-19-billion/ From the 8K filing, Whatsapp has 450 million users, 70% of them are active daily. They are adding 1 million users a day. They are mostly non-US. Effectively Facebook pays about $40-$45 per user to acquire this company. Given that it’s mostly funny money, this is not too bad (the company pays just $9 per user in cash). But it is unlikely this growth will go on for too long. The world has 6 billion people, and getting to more than 25% of them will be tough, especially for a mobile app. Eventually this will have to paid for by advertising. (Whatsapp does have a subscription model of $1 per year, but less than 10% of the current users are likely to pay that, in my opinion. The rest will just move to another free service) If you consider a 15% return per year on investment, the acquisition must return about $2 billion to $3 billion a year in operating profit on whatsapp. (The return on cash is even lower at $600 million)This might be difficult in year one, but it is likely to do so as people move away from horizontals like Google and even traditional facebook to more targeted ones like Whatsapp and Twitter. Given insane valuations of web startups, this one seems just about right. And given the euphoria such deals generate, the correct thing to do if you are a US market investor would probably be: Buy facebook
Raghav_12 Posted February 20, 2014 Posted February 20, 2014 Not sure about that.. but a blog I regularly visit says it may be just right http://capitalmind.in/2014/02/whatsapp-bought-by-facebook-for-19-billion/ well.. apparently they bought whatsapp to kill the threat of a competitor, a strategy which other product companies like Oracle usually follow.
Old guy Posted February 20, 2014 Posted February 20, 2014 Way too high a price IMO. It's reason many people buy smartphones ..
Tiger80 Posted February 20, 2014 Posted February 20, 2014 How these companies earn profit? What's app is free and there are no ads
diga Posted February 20, 2014 Author Posted February 20, 2014 Way too high a price IMO. Microsoft paid 400m$ for hotmail in 1999 for about 10million users .. which translates to 40$ per user Facebook is also paying the same 40$ per user in 2014
The Outsider Posted February 20, 2014 Posted February 20, 2014 How these companies earn profit? What's app is free and there are no ads Just like this. Wait for some big company to buy you out.
Tiger80 Posted February 20, 2014 Posted February 20, 2014 Just like this. Wait for some big company to buy you out. But why will any big company buy you :dontknow: .Most of these apps are free , if they put a charge then people will shift to another
Sachinism Posted February 20, 2014 Posted February 20, 2014 WhatsApp isnt free on Android. Only first year. Anyway what percentage of WhatsApp users don't have Facebook? Are Facebook in a way paying for customers they already have?
diga Posted February 20, 2014 Author Posted February 20, 2014 WhatsApp isnt free on Android. Only first year. Anyway what percentage of WhatsApp users don't have Facebook? are all facebook users active? Are Facebook in a way paying for customers they already have? currently there are no ads in whatsapp.. that model may change sooner or later
StriKe Posted February 20, 2014 Posted February 20, 2014 Now they will force whatsapp users to sign into facebook account or they will merge with facebook messenger :wall: :mad:
StriKe Posted February 20, 2014 Posted February 20, 2014 WhatsApp isnt free on Android. Only first year. Anyway what percentage of WhatsApp users don't have Facebook? Are Facebook in a way paying for customers they already have? Even after one year, they keep extending it. SMS Pack in India are priced high for youth right now. People have started to move to Whatsapp/Viber.
Sidhoni Posted February 20, 2014 Posted February 20, 2014 WhatsApp isnt free on Android. Only first year. Anyway what percentage of WhatsApp users don't have Facebook? Are Facebook in a way paying for customers they already have? That's what is written in their description but it remains free even after an year.
hhunaeh Posted February 20, 2014 Posted February 20, 2014 WhatsApp isnt free on Android. Only first year. Anyway what percentage of WhatsApp users don't have Facebook? Are Facebook in a way paying for customers they already have? I think they are paying for the time users spend on using whatsapp functionality. Facebook wants to make sure its users spend the maximum amount of time using its website. The more time you spend staring at its wall, the more opportunities they have to advertise.
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